The European Investment Bank (EIB), the European Union's long-term financing institution, has concluded a loan to one Portuguese and four Spanish savings banks to set up a venture capital fund endowed with 10 billion pesetas (ECU 60 million)(1) designed to finance innovative capital projects undertaken by small and medium-sized enterprises (SMEs). The Caixa d'Estalvis de Catalunya, Caja de Ahorros de Salamanca y Soria - Caja Duero, Caixa d'Estalvis de Terrassa, Caja de Ahorros de Asturias and Caixa Económica Montepio Geral (Portugal) are participating in the operation. The Fund is being established with contributions from the EIB (50% of the total) and from the five savings banks, which will each be putting in ESP 1 billion from their own funds.
The aim of the Fund is to strengthen the financial base of innovative SMEs by acquiring equity participations on a temporary basis. SMEs targeted will be those in the industrial and service sectors developing or making use of innovative goods or production processes, with their registered offices and core activities in Spain, Portugal or other EU countries and offering high potential for growth and job creation in the Union. The risk associated with investment made via the Fund will be shared by the EIB and the savings banks in proportion to their respective contributions.
The Fund will be managed by Baring Private Equity Partners España S.A. (BPEPE), a venture capital fund management company and a member of the ING Group(2). BPEPE will be responsible for selecting investment schemes, an arrangement ensuring professional and independent management.
This new Fund falls within the context of the Amsterdam Special Action Programme (ASAP), intended to focus a substantial portion of EIB financing on projects in labour-intensive sectors, thereby fostering job creation. To this end, the EIB is devising new financial products catering for high-technology or growth-oriented SMEs, such as the European Technology Facility, administered by the European Investment Fund, as well as venture capital funds in co-operation with financial institutions in the EU Member States, like the one being set up today in Spain with the contribution of the EIB.
The EIB was founded in 1958 under the Treaty of Rome, which created the European Economic Community, with the aim of fostering integration, balanced development and economic and social cohesion in the Member States by providing long-term financing for capital investment furthering attainment of European Union objectives. In response to the Amsterdam Resolution on Growth and Employment of June 1997, the EIB's Board of Governors approved extension of the Bank's operations to health and education as well as increased support for urban renewal and environmental protection, together with programmes specifically targeting SMEs. These are priority sectors which not only strengthen economic and social cohesion within the European Union but also help to create stable jobs.
(1) The conversion rates used by the EIB for statistical purposes during the current quarter are those obtaining on 30/6/1998, when ECU 1 = 167.902 ESP, 0.66 GBP, 0.78 IEP, 1.09590 USD.
(2) Internationale Nederlanden Groep.